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Unformatted text preview: Econ 131 - Spring 2010 Professor: Camille Landais GSIs: Francois Gerard, Mark Borgschulte Problem Set 1 Due Wednesday April 14 in class. Late problem sets will not be accepted. For full credit, staple all pages of the problem set. 1) Short Answers (5 points) Show your work to receive partial credit. Please be succinct (less than 3 sentences). a) It is socially optimal to fully insure individuals against risks. True/False/Uncertain? b) The government observes that health insurance companies charge much higher premiums to those with a gene that predisposes them to cancer. Politicians who view this as unfair propose a bill that would outlaw this form of discrimination. Discuss the consequences of such a proposal for the insurance market and social welfare. c) Large estimates of the elasticity of injury durations with respect to the workers compensation benefit rate directly imply that the moral hazard cost of this program is high and the optimal benefit rate for the program is low. True, False, or Uncertain? d) Why have recent recessions (before the current one) shown a smaller increase in measured unemployment rates? e) America spends much more than other countries on health care but has similar health outcomes....
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- Spring '07